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Tuesday, April 10, 2012

SGX consults public on proposed rule changes to derivatives market

SINGAPORE: Singapore Exchange (SGX) is consulting the public on proposed rule changes as part of enhancements in risk controls in the SGX Derivatives Trading market, ahead of ASEAN Trading Link implementation.

The ASEAN Trading Link will provide brokers of participating ASEAN exchanges with the infrastructure to input orders directly on another participating ASEAN exchange.

The proposed rule changes include requiring members to put in place minimum credit standards for customers with direct market access as well as requiring members to have programmes for maintaining the integrity of their order management systems.

SGX said it intends to implement the rule amendments in June 2012.

Separately, SGX is also consulting the public on proposed rule changes as part of enhancements in risk controls in the SGX Derivatives Trading market.

SGX said it is introducing exchange-hosted pre-trade risk checks on available customer credit for orders before they reach SGX's order matching engine.

"They improve the quality of the derivatives market and reduce systemic risk. Clearing members may set limits on customers' orders, as part of customer credit management," SGX added.

Currently, exemption from pre-trade risk checks is afforded to customers under certain safeguards. With the availability of exchange-hosted pre-trade risk checks, such exemptions will be removed.

Along with the introduction of these risk checks, SGX is proposing certain rule changes governing direct access to its derivatives markets, in alignment with international standards.

SGX said it expects to make the rule changes in the second quarter of the year.